Oil surged to the highest in nearly 10 months in New York alongside a broader market rally as breakthroughs on U.S. stimulus talks combined with the Covid-19 vaccine rollout stoked optimism around a demand revival.
U.S. benchmark crude futures rose 1.3% on Tuesday after Senate Majority Leader Mitch McConnell said Congress will not leave for the year without a spending package, as talks continue to finalize Covid-19 relief.
Meanwhile, Moderna Inc.’s vaccine was deemed safe by U.S. regulators, clearing the way for a second shot to quickly gain emergency authorization.
“Oil’s reacting to pretty significant increases in risk appetite,” said Bart Melek, head of global commodity strategy at TD Securities.
“But with the second wave probably continuing to damage demand growth and inventories likely staying at somewhat elevated levels, the market is having second thoughts about going materially higher.”
Prices edged lower following settlement after the industry-funded American Petroleum Institute was said to report domestic crude supplies rose by almost 2 million barrels last week.
Earlier, the International Energy Agency trimmed its demand forecast for 2021 and said the crude oil glut left behind by the coronavirus pandemic will not likely clear until the end of next year.